So you want to be a junior VC?

You want to get a job as a junior venture capitalist?

Really? Have you seen the state of the venture market? 10 returns are falling and there is not end in sight and the venture industry is shrinking… But, OK, you want to get a junior investor role at a venture capital firm. Having collected job offers at over a half a dozen venture and private equity groups (and having been rejected by countless more!) I’ve got a pretty strong opinion on how to prepare for an interview with a venture firm. This is what has worked for me. If it fits your style then go with it. (Note that I have never worked with biotech investments so this may not be a helpful if you are looking for a position as a life science investor.) I’ll going to need to do a couple of posts on this topic, so I’ll start with 4 questions that you need to have good answers for before you do the 1st interview.

The 1st questions to have answers to when interviewing for a venture capital position

This is not an inclusive list of topics to prepare for, but these are probably the top few questions that you need to have solid answers – and you should have practiced them so they are concise and impactful. It should not take more than 90 seconds to answer each of these questions; probably less. Let the VC ask follow up questions on the issues they care about – do NOT ramble on.

Why now? I mean, why do you want to join this firm at this moment? You’d better have an answer. Start by knowing what companies they’ve invested in recently and what exits they’ve had. When I interviewed, I created little packets on each firm. Recent deals, “mission statement” or focus, partner bios. How did my previous experience overlap with the people I’m going to connect with?

You need to seem like you’ve got a process for approaching a new investment. Check out my venture capital investment memo template for details on what a VC uses to discuss investments. But you need to be brief. I would concentrate on three of the following five topics:

A. Management. Make sure you mention this as an important criteria, but it doesn’t have to be point # 1 on your list. Look for people who have run/managed and grown businesses before and who you trust to grow a startup, or if you are on the West Coast people who seem very coachable, who listen well, who seem like they can grow into being an effective leader and who are humble enough to be willing to bring in a “professional” CEO if the company eventually needs it.
B. Market. You want a big, growing market that has space to have a strong niche player or room for a new big player. For early stage investing the market doesn’t yet have to exist, but you need to be able to feel comfortable that you’ve got at least half a billion, probably more like a several billion dollar market in the foreseeable future. There need to be customers who want/need some sort of a solution and have a willingness to pay. You also need to be able to find and sell to these customers efficiently once you reach scale.
C. Technology. Hopefully the tech is unique, can be defended or can’t be recreated easily. If not, hope that it is at least cool. If it is some sort of a hardware solution it needs to be at least 10x, hopefully more, better than the existing solutions on the market. How much longer will it take and how much will it cost to develop the product and can this team do it?
D. Deal. Can you invest on reasonable terms? Don’t pretend to be an expert here if you’re not. There are lots of good technologists who have become VCs and who did not have any deal experience prior to joining a VC. This is stuff you can learn on the job usually. However, it is important that the capital needs of the company match up with the venture firm’s ability to fund it. How much will the fund need to reserve to support the investment, and does this match up with the capital at the fund’s disposal.
E. Exit. What does this company look like at scale? Is a way to exit the company? Can grow to be a big company and thus do an initial public offering, or are there numerous buyers who might find it strategic/good technology fit? Who are these buyers, and have they been buying?

Be knowledgeable on several industries/spaces that you think would be interesting investment areas for the fund. This is pretty critical. The firm is going to be looking for your to be able to source new investment opportunities, and this starts with figuring out industries that are potentially interesting. Use the criteria laid out for what makes a market interesting, and cite facts and figures around the space you’ve picked as proof that you know what you are talking about. Finally, know of and have the ability to make intros to companies in that space that may be good investment candidates.

Prove that you can learn to execute deals. Show that you are not an idiot mathematically – did you get good grades? Talk about analyses you’ve run at your last job. Mention negotiations that you’ve been part of.

This isn’t intended to be an exhaustive list of questions that you will be asked in a venture interview. Most of my interviews (at least the ones where I’ve gotten the job) have been multi-day affairs, so obviously you are going to get asked a lot of different questions. But you would be amazed – venture partners tend to ask pretty similar things. Stick to a solid framework, because the partners at the fund are going to be comparing notes with each other and you are going to need to be consistent.